An Empirical Analysis of Seller Advertising Strategies in an Online Marketplace

Haoyan Sun (), Ming Fan () and Yong Tan ()
Additional contact information
Haoyan Sun: Department of Decision and Technology Analytics, College of Business, Lehigh University, Bethlehem, Pennsylvania 18015;
Ming Fan: Michael G. Foster School of Business, University of Washington, Seattle, Washington 98195
Yong Tan: Michael G. Foster School of Business, University of Washington, Seattle, Washington 98195

Information Systems Research, 2020, vol. 31, issue 1, 37-56

Abstract: Online marketplaces are increasingly adopting innovative business models such as paid advertising as a major revenue source. We study the effectiveness of two popular advertising tools, sponsored search and social media endorsement, in increasing traffic and sales for online sellers at a retail e-commerce platform. We find that, controlling for sellers’ self-selection behavior in choosing their strategies, both sponsored search and social media endorsement can significantly increase traffic for sellers, with sponsored search being more effective than social media endorsement. In contrast, only sponsored search has a positive and significant impact on sales. In examining the differential effects for sellers with low and high reputations, we find that sponsored search is more effective in increasing traffic for low-reputation sellers, but its effect on sales is larger for high-reputation sellers. Moreover, although social media endorsement increases traffic for sellers regardless of their reputation, it is effective in increasing sales for only high-reputation sellers. Our study provides important managerial implications to sellers as well as e-commerce platforms.

Keywords: e-commerce platform; sponsored search; social media endorsement; online traffic; online sales; reputation (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://doi.org/10.1287/isre.2019.0874 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:orisre:v:31:y:2020:i:1:p:37-56

Access Statistics for this article

More articles in Information Systems Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().